PHM-Exch> G20: Statement on human rights and finance (October 2011)

[Claudio Schuftan]

Rethinking Bretton Woods <http://www.coc.org/rbw> | Tue, Oct 25, 2011

Center of Concern joins other organizations in inviting organizations and
networks to sign onto the statement to the Group of 20 Leaders on Embedding
Human Rights in Financial Regulation.

Send organizational signature to conf_moderator at coc.org by October 31, 9 am
US Eastern time.

*Joint Civil Society Statement to the Group of 20 Leaders on Embedding Human
Rights in Financial Regulation*



We are writing to the Group of 20 Leaders, in advance of their upcoming
Summit in Cannes, to remind them that even in the policies of a most
eminently economic nature, their duties to respect, protect and fulfill the
economic, social, cultural, civil and political human rights, including the
right to development, do not cease, but should take primacy in every
commitment they undertake.

In particular, we are demanding action on the following issues on the agenda
of the G20:

   - Endorsement of worldwide stimuli measures according to human rights
   principles;
   - Reforms to prevent speculative activity in financial markets from
   undermining the enjoyment of human rights;
   - Action to limit the damage to public funding of financial institutions
   that collapse due to excessive risk-taking
   - Regulations of bank capital requirements consistent with human rights
   standards;
   - Agreement to increase the relative fiscal pressure on the banking
   sector and to cooperate to increase transparency and mutual accountability
   in revenue mobilization;
   - An agreement to drastically reduce greenhouse emissions which
   contribute to climate change.

*Background*

More than three years after the beginning of the global financial crisis the
world economy faces an uncertain situation. The continuing economic malaise
calls into question the real extent of the recovery so highly celebrated
last year.

At the same time, the world was at no point close to a “recovery” from the
human rights toll of the financial crisis. Poverty and inequality have
increased, and economic growth, where it did take place, has been largely
jobless, wageless and unevenly distributed to the wealthiest sectors of
society. As the world braces for what seems like another coming economic
recession, countries and households barely able to cope last recession are
now in an even worse situation, with negative consequences for  fundamental
human rights in rich and poor countries alike.

G20 Leaders’ duties to place human rights norms at the center of their
financial policies and regulations cannot be exhausted with a merely
rhetorical recognition (however much such recognition would be an
improvement over current practice). States’ human rights obligations
embedded in the International Bill of Rights require that governments
carefully assess their respective choices and courses of action against the
human rights consequences in transparent, participatory, non-discriminatory
and accountable ways. Only an enduring commitment to respect, protect and
fulfill legally-binding human rights obligations enshrined in the Universal
Declaration of Human Rights and core international human rights treaties can
provide the basis for reforms to ensure a more sustainable, resilient and
just global economy.

Large-scale deprivations of human rights stemming from the financial and
economic crises are not inevitable, natural phenomena.  The G20 agenda in
Cannes in fact provides several actionable opportunities for
governments—individually and in concert with one another—to choose
alternative, human rights-centered paths to a sustainable economic recovery.


*STIMULUS MEASURES:* First, the seriousness of the problems threatening the
world economy today warrant a cohesive and coordinated response from Group
of 20 countries to stimulate their economies. The premature move towards
austerity and the consequent reductions in aggregate demand have been the
main reasons why the world is falling back into an economic crisis.
Austerity policies threaten to continue to deprive people of access to
finance, jobs, and services, while their governments for the most part
refuse to establish fair systems for the private sector to share the burden
of public debt restructurings.

*We call on the G20 to implement economic stimulus measures within a human
rights framework. Human rights standards and principles provide a framework
for the design and implementation of stimuli measures which are
participatory, transparent, accountable and non-discriminatory. We are not
in favor of blind stimuli measures, especially those that would place new
strains on public budgets to benefit private risk-taking. Gender- and
environmentally-sensitive public infrastructure programs, transformational
universal social protection systems and household debt restructuring that
restores spending power, as well as measures to increase disposable income
of the poorest, are among the measures that should be undertaken to ensure
any recovery benefits those most in need.*

*SPECULATION IN FINANCIAL MARKETS:* Second, in spite of the continued surges
in speculative activity in financial markets, there is still limited
progress in the regulation of commodity derivatives trading. Near 60 studies
have been produced showing that speculation in commodity derivatives is
either a good part or the main reason behind the spikes in food and energy
prices that have increased hunger and malnutrition.

*The Group of 20 should commit to the immediate implementation of reforms to
bring Over–the- Counter derivatives to public exchanges, and establish
meaningful position limits on derivatives in exchanges under their
jurisdiction. The setting of circuit-breakers, compulsory delivery or
banning of certain types of derivatives trading, in accordance with human
rights standards and principles, should be given explicit individual and
collective support. *

*LARGE AND COMPLEX FINANCIAL INSTITUTIONS:* Third, regrettably, there is no
guarantee that companies that took undue risks will not again have to be
bailed out with public funding. Large and complex financial firms, some of
them operating in dozens of jurisdictions, have successfully resisted calls
to reduce their complexity or size. They are able to profit from the tax and
regulatory arbitrage that such position makes possible, while their
complexity and size limits the chances that they can be successfully
resolved without disrupting vital banking activities in the event of a
collapse.

*The Group of 20 should undertake measures to reduce the size and complexity
of systemically important financial institutions, including through direct
regulatory intervention to break up large firms. Strict separation between
traditional banking activities such as deposit –taking and credit provision
to households and small companies and proprietary trading should be
enforced. Cross-border banking resolution agreements should be pursued. Yet,
given the presumably long time it will take to develop them, it is urgent to
ensure banks are incorporated and separately capitalized in every
jurisdiction where they operate.*

*BANK CAPITAL REQUIREMENTS:* Fourth, the reforms to the Basel Agreement on
capital requirements amount to too little and are too slow in
implementation. Above all, they amount to more of the same–a reliance on a
bank capital regulation model that banks have proven they can manipulate to
hide the true extent of their risks. Financial companies that have produced
record profits in the last decade and that claim to operate on a highly
efficient basis due to their large size have no justification for their
persistent complaint that they will reduce credit if such capital
requirements are implemented.

*Governments in the long term should lend support to replacing Basel
requirements with a framework for banking regulation that fully recognizes
the duty of States to prevent and protect against and provide effective
remedy for human rights infringements by private actors, including the
financial sector. In the short to medium term, governments must be fully
empowered to consider regulations of banking services as one essential tool
to enhance enjoyment of human rights for all, including by taking proactive
steps to ensure substantive equality in financial regulatory policies to
protect the poor and disadvantaged and allow for where necessary the direct
engagement of the State in the provision of banking services. *

*FINANCIAL SECTOR TAXATION:* Fifth, governments’ obligations to take steps
“to the maximum of their available resources” to fulfill their economic and
social rights responsibilities cannot be upheld without a thorough
evaluation of the contribution that the financial sector makes to public
budgets through taxation. In general, the liberalization of capital of the
last two to three decades has meant more indirect and regressive taxes,
disproportionately raising fiscal pressure on poorer and middle-income
households.

*The G20 should take measures which ensure their financial sectors pay their
fair share. Governments should commit to transparent, participatory and
accountable taxation systems that introduce greater progressivity overall, *
*and increase in particular the relative weight of fiscal pressure on the
banking sector. Specifically, we demand G20 members to agree on the
implementation of financial transaction taxes and to express a clear
commitment to use this newly-generated revenue to fulfill their human rights
obligations–at home and abroad. We further call on governments to take
decisive steps to cooperate internationally in order to ensure transparency
and mutual accountability in domestic revenue mobilization, putting an end
to actions or omissions which prevent governments from raising the resources
needed to fulfill their human rights obligations.*

*CLIMATE CHANGE:* Lastly, the absence of serious commitments from G20
governments to reduce greenhouse gas emissions and adopt greener
technologies is fast becoming a huge human rights issue. Emissions continue
to trigger weather-related natural disasters, subjecting vulnerable and
marginalised communities to increased risk as well as threatening the
earth’s fragile biodiversity.

*As the world’s largest economies and emitters of greenhouse gas emissions
which are imperiling the planet, it is imperative that G20 governments **
take** the lead in arriving at consensus solutions to drastically reduce
greenhouse gas emissions at the 17th Conference of the Parties of the UN
Framework Convention on Climate Change at Durban in November-December 2011.
A fair, ambitious and binding treaty on addressing climate change is the
planet’s last hope which needs to be supported by G20 governments.*



Initial signatories:

Center for Economic and Social Rights (CESR)

Center of Concern

CIVICUS

Development Alternatives with Women for a New Era (DAWN)

IBASE

Social Watch
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